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IRS to pay employee bonuses at lower percentage rate

(Correction: An earlier version of this article incorrectly stated that
the agreement between the IRS and NTEU would reinstate canceled manager bonuses.
In fact, the agreement applies only to union-employee bonuses.)

The Internal Revenue Service reached an agreement Monday with the National
Treasury Employees Union to pay frontline union employees who earned performance
awards last year. The
awards would be paid from a pool of 1 percent of bargaining unit salaries.

"While this settlement provides an awards pool that is less than the amount called
for under the parties' negotiated agreement, the settlement avoids protracted
litigation over the matter," said NTEU President Colleen M. Kelley in a statement.
"The payment date is expected to be this spring."

The awards in question were based on employee performance evaluations on work that
had been performed since the start of 2012.

But faced with automatic spending cuts and congressional outrage last summer, then
acting head of the IRS Danny Werfel announced he would cancel bonuses for IRS
managers, outright, and that he would seek ways to cancel bonuses for union
employees.

Werfel's decision to cancel union-employee bonuses set off legal action and
protracted discussions with NTEU. The union contended that its collective
bargaining agreement with IRS required the agency to set aside 1.75 percent of
union salaries to pay for the bonuses.

"Ultimately, while the agency agreed to pay employees awards, it cited an Office
of Management and Budget directive holding total payouts to 1 percent of
bargaining unit salaries," Kelley said in the statement. "The alternative for NTEU
would have been
to continue litigation, which — while we believe it would have been
successful — would have in all likelihood delayed for a significant time
period any payments to employees and of course, with litigation, there are no
guarantees."